By Nagham Hassan, Market Analyst at etoro
Dubai, UAE- UAE banks are proving they don’t need interest rates to do the heavy lifting. The first four lenders to report third-quarter results, Abu Dhabi Commercial Bank (ADCB), Emirates NBD, Commercial Bank of Dubai (CBD) and Dubai Islamic Bank (DIB), grew on the back of strong lending and cleaner loan books, even as last year’s rate cuts squeezed what they earn on every dirham lent. The question now is less about loan quality and more about who funds all that lending, and at what price.
Commenting Nagham Hassan, Market Analyst at etoro, said: Lending rose between 7.7% and 18% this year across the four, excluding the loans Emirates NBD added when it took control of India’s RBL Bank, and ADCB and CBD both posted record profits for the first nine months of the year. Three rate cuts in late 2025 narrowed the gap between what banks earn on loans and pay for funding, leaving margins lower than a year ago at ADCB, Emirates NBD and DIB. ADCB shows the pattern most clearly, with its margin slipping to 2.22% from 2.47% while pre-tax profit still climbed 28%, helped by a 44% drop in loan-loss charges.
The share of problem loans fell at all four banks, to between 1.6% and 3.0% of their books, with ADCB hitting a record low. Where charges for bad loans rose, the causes were specific rather than sector-wide, and problem-loan ratios still improved. Core capital, the buffer that absorbs losses, sits at 12.7% to 13.8% of risk-weighted assets, comfortably above regulatory requirements, and ADCB now expects lower loan losses this year while Emirates NBD lifted its lending growth forecast percentage to the low 20s.
Deposits are where the next chapter gets written. Loans grew faster than deposits at all four banks, with CBD’s lending up 7.7% against deposit growth of 0.7%, and DIB’s up 10% against 1%. Banks are turning to fixed-term deposits, which pay savers an agreed rate where current and savings accounts pay little or nothing, and two of the four said this shift adds to their funding costs. The price of funding will be one of the biggest swing factors for fourth-quarter profits.
The Central Bank’s support package, which lets borrowers defer repayments, runs until 15 January 2027. ADCB’s own data shows credit-card delinquencies, meaning cards more than 30 days overdue, rising to 3.6% from 2.7% in one quarter, still below the market’s 4.7%, an early signal to follow as that support runs down.
This week’s results from First Abu Dhabi Bank (FAB), the country’s largest lender, and Islamic lenders Abu Dhabi Islamic Bank (ADIB) and Ajman Bank will show how far these trends reach. FAB will reveal whether strong lending and falling bad-loan charges extend to the sector’s biggest balance sheet, while ADIB and Ajman Bank will show how Islamic banks are handling funding costs as competition for deposits heats up.
The sector heads into the final quarter with capital buffers well above what regulators require, growing on real credit demand and with loan books in good shape. The loan-quality story has largely been told, and investors now want to see banks keep attracting the deposits to fund that growth without giving away too much margin.
- THE VIEWS EXPRESSED ARE SOLELY THOSE OF THE GUEST.
- SOURCE: MEDIA RELEASE / SUPPLIED CONTENT WITH IMAGE; ILLUSTRATIVE IMAGE ALSO USED
